Best Business Books 2003: Globalization

What the Rich and Free Owe the Poor and Oppressed

The shock of September 11, 2001, produced some pretty strange bedfellows. No, I’m not talking about George Bush and Tony Blair. I’m referring to Peter Singer, the influential left-wing philosopher who regularly chides Americans for being self-absorbed and selfish, and Niall Ferguson, the brilliant Oxford historian who sees Americans as the world’s knights in shining armor. One quotes Marx and (John) Lennon, the other Churchill and Kipling. One refuses to wear a leather belt, the other looks like he stepped out of an Armani ad. One wants a world government, the other calls on America to wield power more boldly. Yet these intellectual oddfellows have a surprisingly similar perspective on what the rich and free owe the world’s poor and oppressed.

At a time when terrorism and the mounting toll of the Iraq war have many Americans yearning to retreat inside a Fortress America, Singer and Ferguson are among the most authoritative voices urging more, not less, engagement beyond America’s borders. Though miles apart politically, both embrace globalization and both want America to take more responsibility for spreading its benefits and mitigating its ill effects. In One World: The Ethics of Globalization (Yale University Press, 2002), Singer shows why preventing genocide and famine, and cleaning up the environment far from home, are moral imperatives for the world’s sole superpower. In Empire: The Rise and Demise of the British World Order and the Lessons for Global Power (Basic Books, 2003), Ferguson constructs a compelling case for nation building. Their cosmopolitan perspective, though quite possibly at odds with the current mood, is sufficiently pragmatic and practical to be useful to anyone who’s grappling with the big ethical and political dilemmas facing global business today. One World, in particular, seems destined to become a staple of b-school reading lists.

Business readers will also want to pick up two other recent books, World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability (Doubleday, 2002), by Yale Law School professor Amy Chua, and The Future of Freedom: Illiberal Democracy at Home and Abroad (W.W. Norton & Company, 2003), by Fareed Zakaria, Newsweek’s high-profile international editor. Despite their ominous titles, both volumes are internationalist in flavor. Their point is to expose some of the potential pitfalls of applying the Western model without sufficient attention to institutions — such as progressive taxation, protection of civil liberties, and philanthropy — that enable it to work so well at home.

The Case for Global SharingIn One World, Singer, best known for his controversial views on animal rights and euthanasia, returns to the topic that got him interested in philosophy in the first place. The book, written in the crisp, concise prose that has won Singer a worldwide audience, begins with a question: What do the planes that reduced the Twin Towers to rubble and sport utility vehicles that emit greenhouse gases have in common? Both reflect “the way in which we are now one world,” says Singer, adding gloomily that SUV owners will “almost certainly kill far more people” than Islamic terrorists, by depleting the ozone layer. Like the one-worlders of the 1950s who saw global government as the only way to prevent humanity from incinerating itself with newly invented weapons of mass destruction, Singer argues for “the abandonment of the absolute idea of state sovereignty” and the closely related notion that national leaders ought to give “absolute priority to the interests of their own citizens.” What he really wants is for Americans, the world’s wealthiest citizens, to care more about the world’s poor. And that, of course, applies to America’s corporate citizens as well as its individual ones.

Our intuitive sense of right and wrong, he says, has not adapted to the fact of growing technological and economic interdependence. For example, the most influential work on justice written in 20th-century America, John Rawls’s A Theory of Justice, makes no mention of “the injustice of the extremes of wealth and poverty that exist between different societies.” What the world needs, says Singer, is “a sense that we really are one community, that we are people who recognize not only the force of prohibitions against killing each other but also the pull of obligations to assist one another.”

All this may sound like Singer’s warm-up for an antiglobalization sermon, but it isn’t. Instead, readers are treated to a short list of plausible proposals for altering the rules of the game to spread more of the benefits around. Despite his star status among those who excoriate the World Trade Organization, the International Monetary Fund, and multinationals, Singer is no Noam Chomsky. For a professional ethicist, he adopts a refreshingly unmoralistic approach to problems like genocide and global warming. On the latter, he joins mainstream economists in advocating trade in pollution rights. Indeed, he admonishes leftists who find it distasteful to let rich polluters buy their way off the hook: “The point is not to punish nations with high emissions, but to produce the best outcome for the atmosphere.”

More surprisingly, Singer hints that globalization per se may not be an appropriate target for moral outrage. He hoists critics of the North American Free Trade Agreement on their own logical petard by pointing out that it is hypocritical to condemn the treaty for (supposedly) costing Americans millions of jobs when “any transfer of work from the United States to Mexico can be expected to raise the income of people who are, on average, much less well off than those U.S. workers who lose their jobs. Those who favor reducing poverty globally, rather than only in their own country, should see this as a good thing.” Such consistency is refreshing, if rare. So is Singer’s willingness to take facts on board that don’t necessarily square with his ideological convictions.

Is it really true that freer trade has made the poor poorer while enriching the rich? Singer skewers commonly cited but flawed U.N. statistics purportedly proving this to be the case. He cites more reliable data showing that the gap between the incomes of the rich and poor has narrowed more or less continually since the 1960s. Contending that “what matters is not inequality but the absolute living standards of the poor,” he reports that real incomes of the poor have doubled in the past four decades, largely because of spectacular growth in China. What’s more, he correctly emphasizes that income is only one indicator of well-being. The U.N.’s Human Development Index, he says, has risen consistently during the last four decades, “suggesting that the world’s poorest people have become better off overall in terms of income, life expectancy, and the amount of education they receive.”

Yet an appalling, if diminishing, fraction of the world’s population still subsists on little more than the amount an average American spends on the family pet. Most of those mired in extreme poverty live in Africa and south Asia, but their claim on Americans is nearly as great as if they lived next door, says Singer. “There are few strong grounds for giving preference to the interest of one’s fellow citizens, and none that can override the obligation that arises whenever we can, at little cost to ourselves, make an absolutely crucial difference to the well-being of another person in real need.” He argues that the U.S. should be less stingy when it comes to foreign aid, a fairly uncontroversial point given that the United States is virtually last among all rich nations even when private charity is counted. But the author wisely eschews rants like those of one prominent fellow ethicist who absurdly equates George Bush with Mao Tse Tung and the U.S. lack of generosity with “actively starving … millions of people” the way Mao did.

Instead, Singer proposes that affluent Americans “give at least 1 cent in every dollar of their income to those who have trouble getting enough to eat, clean water to drink, shelter from the elements, and basic health care.” Reasonable appeals have a way of motivating people. Indeed, reading One World produced an O. Henry moment in my own household, when my husband and I — unbeknownst to each other — made identical contributions to the International Red Cross and Oxfam. Having given 2 percent this year, I suppose next year is already taken care of.

Imposing Preferred ValuesNiall Ferguson wants Americans to do more than open their wallets; he’d like them to be less inhibited about spreading markets and democracy. In Empire, Ferguson sets out to radically revise the conventional view of British imperialism by arguing that Queen Victoria’s empire did “more to promote the free movement of goods, capital, and labor” than any other. But his punch line is that the United States, “as the most successful economy in the world — as Britain was for most of the eighteenth and nineteenth centuries — can do a great deal to impose preferred values on less technologically advanced societies.” By “preferred values,” Ferguson chiefly means Western norms of law, order, and governance.

This, of course, is advice that the Bush administration is putting to the test in Iraq. Ferguson is sufficiently politically incorrect to approvingly quote Kipling’s infamous 1899 appeal to America to “Take up the White Man’s burden/Send forth the best ye breed/Go, bind your sons to exile/To serve your captives’ need.” This reeks of appalling ignorance of democratic traditions in non-Western societies (more about this later). But Ferguson is making a serious argument when he claims that “without the spread of British rule around the world, it is hard to believe that the structures of liberal capitalism would have been so successfully established in many different economies around the world.” With some justification, he flatly rejects “the notion that British imperialism tended to impoverish colonized countries.” Much less convincingly, he also gives British imperialism credit for spreading democracy. “Without the influence of British imperial rule, it is hard to believe that the institutions of parliamentary democracy would have been adopted by the majority of states in the world, as they are today,” he writes. The French, America’s allies in 1776, would probably not agree. Neither would the Indians who came to equate democracy with independence and threw the British out after World War II.

Like Singer, Ferguson believes that the world sorely needs “a form of international government that can work — and not just for the benefit of the ruling power.” Unlike Singer, who sees a bigger role for the United Nations, however, Ferguson thinks that the United States is the only truly viable hegemon. At the moment, this is where things seem to be heading. Businesspeople will appreciate Ferguson’s sophisticated grasp of the interplay between politics and economics, along with his breezy prose. Ferguson acknowledges that America’s anti-imperialist tradition makes it doubtful that the U.S. will embrace the role he has in mind — at least openly: “…the empire that rules the world today is both more and less than its British begetter. It has a much bigger economy, many more people, a much larger arsenal. But it is an empire that lacks the drive to export its capital, its people, and its culture to those backward regions which need them most urgently and which, if they are neglected, will breed the greatest threat to its security.”

The unintended consequences of exporting America’s model and the possible repercussions for America’s security form the theme of Amy Chua’s provocative World on Fire. Her doubts about the kind of evangelism that Ferguson recommends stem partly from her reflections on the brutal murder of a wealthy aunt in Manila by the family chauffeur. That trauma eventually led her to conclude that capitalist success and the popular franchise can be an unexpectedly combustible mixture. Her cautionary note — that attention must be paid to the emotional fallout from globalization — will undoubtedly strike a chord with executives who live in, work in, or have responsibility for operations in rapidly changing traditional societies.

Without claiming to offer a “general theory,” Chua calls economically successful minorities “the Achilles’ heel of free market democracy” in many countries with impoverished majorities. “Markets concentrate wealth, often spectacular wealth, in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority. In these circumstances the pursuit of free market democracy becomes an engine of potentially catastrophic ethno-nationalism…” To support her case, Chua cites a litany of genocide and racial murder aimed at ethnic elites from Serbia and Rwanda to Indonesia and Israel.

Chua compares the wealthy Chinese, like her aunt, who dominate the markets of many Asian countries to the successful Jews of Europe in the 1920s. “In the Philippines, millions of Filipinos work for Chinese; almost no Chinese work for Filipinos. The Chinese dominate industry and society at every level…. When foreign investors do business in the Philippines they deal almost exclusively with Chinese.” When she was 8 years old, she recalls, she stumbled into the servant quarters in her aunt’s villa: “My family’s houseboys, gardeners, and chauffeurs … were sleeping on mats on a dirt floor. The place smelled of sweat and urine. I was horrified.”

Mass ResentmentFor Chua, September 11 was a sign that Americans are regarded a lot like the Chinese elite in the Philippines. “Americans today are everywhere perceived as the world’s market-dominant minority, wielding outrageously disproportionate economic power relative to our size and numbers. As a result, we have become the object of mass, popular resentment and hatred of the same kind….” She may be overstating the animus — and its economic roots — but the analogy feels right.

On close reading, Chua isn’t attacking free markets or democracy. She’s interested in figuring out ways to advance them while soothing popular resentment. She’s hardly alone when she warns that “immediate majority elections in many of the Arab states would likely bring to power anti-market, anti-Israel, anti-America, and anti-globalization regimes.” Chua’s intelligent dissection of affirmative action programs like Malaysia’s NEP and Quebec’s ethnic preference programs — one strategy for defusing tensions — is particularly useful. Her proposals for tax and transfer programs and constitutional protection of minorities enforced by independent judiciaries also make sense. She makes an important, and often overlooked, point that “democracy comes in many guises.” Citizens of China have secured many valuable individual freedoms not available before 1970, even though they have yet to obtain majority rule, multiple political parties, or a free press.

Chua’s instincts are mostly sound. She describes how, after her aunt’s murder, her relatives hired more bodyguards, erected barbed-wire fences, and bought vicious watchdogs. She wonders if visible good deeds might not afford them better protection. She cites positive examples such as Indian philanthropists in East Africa and a Jewish capitalist in Siberia who models himself on Andrew Carnegie and has spent “tens of millions of dollars of his own money airlifting food, parkas, boots, and medicine.” Concludes Chua, “It’s difficult to see, in any event, how a little generosity and humility could possibly hurt.” Singer would certainly agree.

Fareed Zakaria’s superb book-length essay, The Future of Freedom, raises some of the same cautionary themes as Chua’s work. Although more cerebral, Zakaria’s book is also rooted in close personal observation of a society, India, that has long grappled with the sometimes conflicting ideals of democracy and promises to eradicate poverty and ethnic violence. Zakaria argues that “India has been unable to engage in sustained reform largely because its politicians will not inflict any pain — however temporary — on their constituents.” One result, he says, is that India, which started out no poorer than China in 1960, now lags far behind in terms of life expectancy, infant mortality, nutrition, and literacy. He neglects, however, to mention the downside of China’s failure to achieve free and open public debate, including setbacks in China’s public health system since 1979 and, more dramatically, the role of censorship in the recent SARS epidemic.

Oddly, Zakaria, Chua, and Ferguson never challenge the Eurocentric premise that democracy’s roots are purely Western. Amartya Sen, the Nobel laureate in economics, and Kwame Anthony Appiah, the Princeton political philosopher, among others, have shown that key elements of democracy — namely, popular government at the local level, public debate, and tolerance of dissent — have flourished in many different Asian, African, and Middle Eastern societies as far back as the fifth century b.c., including times when they were conspicuously absent in Europe (during the Inquisition, for example). By failing to acknowledge democracy’s global roots, Zakaria and the others concede far too much to opponents of democracy who claim that freedom is an alien value imposed by the West, and to pessimists who doubt that it can ever take hold in what Ferguson dismissively calls “the backward regions.”

Like Chua, though, Zakaria is a firm believer in the need for markets and liberty. His finely tuned argument is that democracy involves more than elections. For democracy to work in poor countries, considerable authority must be delegated to institutions insulated from day-to-day political pressures — just as it is in the United States. As models, he offers the Supreme Court, the Federal Reserve, and the U.S. military. The Court, for example, is the guarantor of the individual freedoms enumerated in the Bill of Rights. Readers will be reminded of the debates among America’s Founding Fathers, who tried to balance majority rule with individual rights by adopting a Bill of Rights and a system of checks and balances. His point is that extending the franchise without securing these rights — via an independent judiciary — can lead as easily to tyranny and violence as it can to genuine democracy.

At a time when the fates of rich and poor nations are closely intertwined, far too much of the public discussion of America’s role in the world is either utterly vacuous or dominated by ideology. Despite their sharp disagreements and occasional blind spots, these authors manage to combine high ideals with reasoned argument, fresh insights, and a willingness to embrace inconvenient facts. That’s the kind of thinking that should help to frame the debate about citizenship, government, and global business in the 21st century.

Author Profiles:

Sylvia Nasar (szn1@columbia.edu) is the author of A Beautiful Mind (Simon & Schuster, 1998), the award-winning biography of mathematician John Nash. She is the John S. and James L. Knight Professor of Business Journalism at the Columbia University Graduate School of Journalism, and was formerly a writer at the New York Times, U.S. News & World Report, and Fortune. She is currently working on a book on 20th-century economic thinkers.

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